eli5 why do companies with billions in the bank care about stock prices. Wouldn’t they be financially fine if the stock lost money?

Question

eli5 why do companies with billions in the bank care about stock prices. Wouldn’t they be financially fine if the stock lost money?

In: 103

Answer 1

Companies can still raise money through new stock sales, so there’s that too care about.

But moreso companies are controlled by their board of directors. The board members are usually large stake shareholders, and they serve at the pleasure (they can be voted out) by other shareholders. So companies care about their stock price because the people controlling them make money through the stock.

Many privately held companies (companies not on the stock market) don’t care about their such prices because the owners don’t plan to sell shares soon.